These are soap opera-like questions. Interesting? For sure if you have insomnia. Deep? Not really.

A week after the acquisition I think we all need to be stepping back and reflecting on the meaning of the deal as it relates to our future. Actually, if we do that, many of the other questions do become easier to answer, and possibly more interesting.

So, here goes.

Facebook got Instagram cheaply.

Instagram was a cheap deal for Facebook. Focusing on the dollar amount is frankly meaningless unless you were an investor or employee in Instagram. The only really important number is that the deal represents 1% of Facebook. The $1 billion number arises based on the assumption that Facebook will IPO at about a $100 billion valuation (which may be conservative).

1% of Facebook is so little to the founders and shareholders of Facebook that the deal could be done and agreed over the weekend with only a minimum of Board involvement.

There is no bubble

There is definitely no bubble here. For Facebook to acquire the mobile DNA represented by Instagram (not unlike the DNA they acquired when Bret Taylor’s FriendFeed was acquired many moons ago) for 1% of the company is a cheap deal.

Mobile is a life or death play for the Internet giants

A cursory glance at the Facebook S1 filing should make clear how important mobile is to the company:

Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results.

We had 432 million MAUs who used Facebook mobile products in December 2011. While most of our mobile users also access Facebook through personal computers, we anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook. We have historically not shown ads to users accessing Facebook through mobile apps or our mobile website. In February 2012, we announced plans to include sponsored stories in users’ mobile News Feeds. However, we do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.

So, the true meaning of the acquisition for Facebook was that it represents an inexpensive bet on helping the company face up to its challenges on mobile.

Mobile innovation will disrupt and build enormous value

Now, having said that, $1 billion is a lot of money. And the size of the deal represents proof, if proof was needed, that mobile software innovation will drive real value in the years ahead. Instagram represents the iconic deal at the beginning of a new era of mobile computing, characterized by consumers using devices to capture and share their lives with each other, and having no need of desktops or laptops to do so.

Instagram is the Netscape or YouTube of the new era

Every era has its iconic deals that signify the start of the era. In Web 1.0 it was the Netscape IPO; In Web 2.0 it was the acquisition of YouTube. In the mobile era it is the acquisition of Instagram. This is the first, and will not be the largest, deal of this new era. Already there is talk of Square being valued at $4 billion. Others of this size are surely coming.

Web 2.0 is over

The key takeaway from the last week is that Web 2.0 is now firmly in our rear-view mirror. Consumer adoption of powerful mobile computing devices and their adoption of the services that the mobile era brings means that innovation and value will now largely be found in mobile software and services, and mobile’s disruption of real-world businesses as well as of web 1.0 and 2.0.

The numbers are clear and compelling

The numbers support this thesis. Kleiner Perkins Caufield & Byers’ Mary Meeker, a regular analyst of the growth of the mobile internet, has documented it recently, showing both internet traffic and device sales beginning to eclipse the volumes for desktops and laptops. But, and this is huge, we are only at the beginning of this era. The number of smart phones is still tiny compared to feature phones. We only just reached the point where monthly sales of smart phones eclipsed feature phones in the US. Over the next few years billions of smart phones will ship and be used by consumers to manage and record their lives. Enterprises will discard dated architectures to empower employees to use mobile for most tasks. Governments will use mobile to deliver services to citizens. The world is not going to stand still.

Mobile or death.

In all of this existing businesses will either be reinvented or die. Even relatively recent Web 2.0 services will fall into disuse as this trend grows, And re-invention will certainly require mergers and acquisitions. New behemoths will be born that will not want to be acquired – the Yahoo, Google, Facebook sized companies of this era.

All talk of bubbles is both mistaken and perplexing when you examine the real trends that are unfolding, unleashed by the innovation at Apple, and others. Fasten your seat belts. We are about to take off.